It is easier to adopt an economic policy when a recession is caused by a supply shock rather than a demand shock.

Question

Quizplus · Accepted Answer

Supply shocks often involve sudden changes in the availability of a commodity or service (such as oil), making it more challenging for policymakers to adjust economic policies effectively. In contrast, demand shocks, which affect the overall demand for goods and services, can often be more directly addressed through fiscal and monetary policy adjustments.

It Is Easier to Adopt an Economic Policy When a Recession